NEW ORLEANS, May 11 (Reuters) - Top U.S. mobile operators are turning to a new type of equipment known as small cells to boost network capacity in the face of a shortage of wireless spectrum.

With consumer demand for wireless data services like mobile video streaming growing sharply, network operators say they need access to more wireless airwaves soon or they will risk running out of capacity to support their customers.

Since it may be years before enough new spectrum becomes available, operators are looking for technology solutions now to try to avoid network congestion that could send customers away in frustration or stunt industrywide revenue growth.

As a result, operators came to the CTIA annual wireless showcase in New Orleans this week keen to discover how they might use existing spectrum more efficiently.

One promising area is so-called small cells - mini versions of the giant wireless broadcast towers that send and receive all the cell phone calls carried by today's networks. Installing these small cells in between the bigger towers will boost capacity in those areas.

Since these devices have smaller price tags and are more compact than traditional cell sites, operators will be able to place them more easily in buildings or even on lamp posts on busy city streets.

Various types of small cells were on display by network equipment makers at the New Orleans trade show. Wireless carriers do not expect the first products to come to market until later this year, and they say it is still too early to estimate total costs for using the technology.

CAPACITY CRUNCH

AT&T Inc and Sprint Nextel, the No. 2 and No. 3 U.S. mobile providers, both said at the CTIA trade show that they already have plans for small cells. Market leader Verizon Wireless and No. 4 player T-Mobile USA say they are looking at the technology and eyeing future developments.

The trend could be a boost for equipment makers such as Ericsson, Alcatel Lucent and Nokia Siemens, a venture of Nokia and Siemens.

Sprint plans to start installing small cells late this year to boost indoor coverage, particularly in sports arenas and similar locations before expanding the technology to outdoor areas in congested markets in 2013.

"The driver comes down to the need over time to get more out of your spectrum," Bob Azzi, network senior vice president at Sprint, told Reuters on the sidelines of the CTIA show on Wednesday. "The technology is maturing to the point that it is feasible to start."

Azzi said Sprint would consider products from vendors such as Alcatel Lucent and Nokia Siemens.

Global Mobile data traffic is expected grow at a compound annual rate of 78 percent between 2011 and 2016, according to research from network equipment maker Cisco Systems Inc . Cisco estimates that two-thirds of global mobile data traffic will come from video by 2015.

Since video is one of the most bandwidth-hungry applications, AT&T said it sees the strong consumer demand for mobile video streaming as the biggest driver of network-management improvements in the coming years.

AT&T plans to start testing small cells in its network late this year or early next year. Since it failed last year in its bid to acquire T-Mobile USA and gain more spectrum, it says it needs to boost capacity somehow.

LOWER COST

Rinne said that since deployment has yet to kick off, it is too soon to estimate the cost of installing small cell. But Ovum analyst Daryl Schoolar said that the new devices could cost anywhere between $2,000 and $10,000 depending on the model, compared with the roughly $30,000 investment for traditional cell sites.

Ericsson marketing manager Hans Beijner said, however, that cost would not likely be the main motivation for operators to install the new products. "You do it because it's the only solution" to boost capacity, he told Reuters at the show.

In the United States and Europe in particular, Beijner said that operators have a tough time gaining planning permission from local authorities to build more cell towers.

Small cells, however, are designed to be much easier to attach to building exteriors, or onto existing street infrastructure such as lamp posts, he said.

Beijner estimated that, on average, operators would install one to three of these small cells for every large cell in their network in the next five years.

However, some U.S. operators may be slower to adopt the technology. In particular, U.S. operators want more advancements in small cells to be used in networks based on Long Term Evolution, a high-speed wireless technology they are currently using to upgrade their networks.

T-Mobile USA needs to bolster its network capacity to catch up with its bigger rivals in providing higher-speed services to customers.

"In the next couple of years you'll see small cell deployment on a larger basis," said T-Mobile USA Chief Technology Officer Neville Ray, who is waiting for industry standards defining the technology to develop further.

Verizon Wireless is also keenly watching the technology but Tony Melone, the chief technology officer for parent company Verizon Communications, said, "It's just not quite ready."

Verizon Wireless is a venture of Verizon Communications Inc and Vodafone Group Plc. T-Mobile USA is a venture of Deutsche Telekom.